Uncovering the Gobi ‘Watergate’

Part One,
By Michelle Tolson

“The most important thing is that the government, provinces and the public must have the same understanding of mining. [Herders] living in the rural areas lose their live stock to mining companies, while city residents have all expressed their hope to receive shares from the mining companies,” said Fernando Loayza, of the World Bank during a discussion on mining titled “the Mining Sector’s Environmental and Social Strategy Evaluation,” on October 10 and 11 as reported last week by the UB Post.
Mongolian media, centered in the capital, has mostly focused on the returns from mining: the Oyu Tolgoi investment agreement and the public’s shares of government-owned Tavan Tolgoi coal mine. The concern of herders in the Gobi seems to be largely ignored by the papers. At a recent conference on human rights in Ulaanbaatar, they voiced stories of livestock loss and the lack of water to parliament members, ministry representatives, civil society leaders and government officials.
The three aimags in the Southern Gobi Region are the Dundgovi, Omnogovi and the Dornogovi—which collectively hold a population of 150,000 according to the 2007 census. All three regions have relied on animal husbandry for their livelihoods. These three regions also hold a large number of mining licenses representing the largest deposits of coal, copper and gold with the greatest value, so the pressure between local needs and the needs of the nation wanting to develop seems inevitable.
Oyu Tolgoi, is located in the Omnogovi aimag and is set to go operational shortly. Industry circles see it as one of the largest deposits of copper in the world, though it also has gold deposits. The Oyu Tolgoi Information Center in Ulaanbaatar features a clever model that illustrates the scale of the deposit with mock up of a large copper blob that hovers above a miniature city of Manhattan, like city-sized space ship. The depth of the deposit is several times higher than any skyscraper in model. Yet, just as this deposit dominates the mini-Manhattan, it seems to similarly influence Mongolia.


The Oyu Tolgoi investment agreement—signed in 2009 and put into effect in 2010—opened the door to a gold-rush in foreign investment. From an outside perspective, Oyu Tolgoi functions as the canary in a coal mine, illustrating the health of the investment climate. The economic impact on the country since the signing of the investment agreement has been swift. The year 2009 was a recession period for Mongolia but when the investment agreement went into effect in 2010, the country’s economic growth was 6.4 percent. In 2011 the growth spiked to 17.3 percent, earning Mongolia the status of the fastest or second fastest growing economy in the world, depending on the measurements used. Though China’s growth is slowing—and as a result Mongolia’s (China is the largest purchaser of its products)—the country still tops the charts in economic growth.
If money is on the minds of Mongolians in the capital, the main assets concerning herders in the Southern Gobi region is their livestock and ensuring access to water and grass.
During the human rights conference, the governor of the Dungovi aimag had sadly expressed his inability to protect his region from being dominated by mining licenses. At one point, 50 percent of his aimag had been covered with mining licenses, which he said were issued from the central government and not his administration. His aimag has traditionally lived by herding and the main source of revenue has come from livestock, yet with the booming growth of mining exploration in the region, the traditional way of life has been threatened as mining operations have taken over the land.
The World Bank released an assessment in 2010 on water usage in the Southern Gobi Region, using data from the Dundgovi, Dornogivi, and Omnogovi. The study estimated that the entire region has approximately 3.8 million head of livestock comprised of 120,000 camels, 260,000 horses, 100,000 cows, and 3.4 million sheep and goats—all needing water. Camels consume an estimated average of 45 liters of water a day, while horses consume 35 L/day, cows 35 L/day and sheep-goats consume 4 L/day. This comes to a total of 31,600 cubed meters a day for the combined total of livestock.
In contrast, the large mining site’s water use—such as Oyu Tolgoi and Tavan Tolgoi—is each double the amount of all the livestock on the three Gobi aimags. The World Bank report found Tavan Tolgoi topped the charts at 76,000 meters cubed (m3) of daily water usage for 2010 taken from groundwater resources. According to the report, Oyu Tolgoi (this would represent the construction phase) used 67,000 cubed meters taken from ground water resources. Tsagaan Suvarga mine used 32,000 cubed meters of water a day taken from Tsagaan Tsav groundwater. These three represent the largest mines monitored from 2010 data, though there are also several smaller mines. The situation will change when more mines become operational. The World Bank study noted significant limitations for the capacity of existing water resources, noting that water in the Southern Gobi Region could potentially last only 10-12 years—taking into consideration the number of mining licenses, the local populations shifting from the countryside to the aimags and the ongoing climate change issues.
Sara Jackson, Ph.D. Candidate in Geography from York University at Toronto, is studying the impact mining has on herders in the Southern Gobi region. Jackson said “Herders for example use a few liters per day per person. Most of their water use goes for their animals.” She found through her research that herders thought the water usage of the mining companies and their staff was “distressing.” The researcher, who has conducted focus groups with Gobi herders clarified. “People say, ‘well mining is ok. We understand that we need development and mining is a way to do that, but we don’t them to take all our water.’ ”
As of August 2012, Oyu Tolgoi has completed a pipeline to a saline aquifer that the company states will not impact the main freshwater aquifer for the area. Nor is the saline aquifer connected to the shallow wells that herders use. Mark Newby, Oyu Tolgoi’s Water Resources Principal Advisor, detailed the mine’s planned water resource. “The [saline] aquifer is 35-70 km away so the start is at 35km and the end is at 70km [35km long].” The pipeline to the aquifer has been going through its commissioning period and a reverse osmosis treatment plant for treating the saline water (also built) will go through a commissioning period as well. The water resources research began in 2003 at the same time period as the mineral resources, in order to ensure that when the extraction of the minerals was ready, the water source would be ready as well, Newby noted.
Oyu Tolgoi has been blamed for risking the fragile water resources in the Gobi, but according to Newby and the Environmental and Social Impact Assessment (ESIA)—which can be found online, the saline aquifer will be used to process the copper and gold at the mine. Oyu Tolgoi has strict limits on water usage and also recycles the water. Newby explained “The Water Authority gave us permission to use less than 20 percent of the overall quantity over 40 yrs. So that great majority—over 80 percent remains. It’s not perfect in the sense that it is completely renewable and recharged, it is actually used, but to a very limited extent in way that doesn’t really affect existing users.” Such as herders accessing wells for their livestock or the town of Khan Bogd, which is 40 km away and uses the large, freshwater aquifer known as the Gunii Hooloi. Though the World Bank Report lists Gunii Hooloi as a source of water for Oyu Tolgoi during the construction phase, Newby maintains the mine used nearby bore-holes to access water while the saline aquifer was having its pipeline built.
Press releases from OT Watch, an NGO that represents the Mongolian people and monitors Oyu Tolgoi’s activities, question the company’s water usage during the construction phase and claim that the water usage agreement only covers the post-construction phase. The UB Post asked for further clarification on this last week but the director was in Japan at the time, attempting to halt World Bank’s funding to the project.
However, Newby said “During the construction period, the main mine site activities—[the water bores] were fully assessed and put through a permitting process with the Water Authority and put into temporary use—the assessments get renewed every year—until the main water supply [a saline aquifer] is established in the site. During their use they are fully documented—all passports, all permits, including water use contracts with the government for the fee payment. Frankly speaking, the mine site itself has very poor water supplies but it was a good time period to make impressive use of water recycling because without intense water recycling during the construction period, the water supplies would have become a hold up or a limit on what construction could be done.”
An interview with Director Enkhat of the Ministry of Environment and Green Development supported this. The interview was facilitated by G. Erdenechbayasgalan, Officer of Environment and Natural Resources and Saran Tse Tseg, Officer in charge of the ESIA for Mining Projects, who both helped with translations and contributed to the information. “So in this document (ESIA] there is all this bore-hole monitoring and bore-hole gauging. It’s installed and it’s also stated in the statement. So basically, we can monitor through these stations. How much they are using, if they are exceeding measurements. They are controlling how much they are using. It’s called sampling points, “ said the Ministry of Environment and Green Development.
“So what we use for Oyu Tolgoi is approved at 870 liter/per second, so basically that is the approved limited use of the water. So, this is the First Stage and the next stage is the Enrichment Stage and we will control and limit again. So, the First Stage is mining operational and the next stage will be controlled. We will review this authorized permit next year in 2013.”
When asked by the Ministry to clarify that Oyu Tolgoi fully complies with the ESIA report which has been contested by local environmental NGOs as not factual, the Ministry representatives firmly stated: “They [Oyu Tolgoi] didn’t reach this speed, they didn’t reach the maximum. We are already, all the time controlling the water usage.”
When asked if environmental NGO representatives or any other journalist had visited the Ministry to discuss this issue, the group collectively said “No, you are the first.” They did say that they were sent documents by NGOs.
During the human rights conference, Mr. Ganbold Duvchigdamba, Director of the United Movement of Mongolian Rivers and Lakes (UMMRL), questioned Oyu Tolgoi’s capacity to meet its workers’ water needs. OT Watch also noted this as a concern via press releases issued by Bank Information Center. When asked about this last week, Newby of Oyu Tolgoi clarified that workers were using bottled water (the plastic is recycled in Mongolia) but soon the mine’s drinking water needs will be met through the saline aquifer water when the water purifier is commissioned.
Mr. Ganbold had further stated inspectors were not allowed at Oyu Tolgoi. During the recent ESIA open house for Oyu Tolgoi, Nicole Gagstetter, Manager Social Investment and Special Projects, explained inspectors regularly visit the mine and “are never turned down.” Inspectors from taxation, state, safety, financial, human rights, and operational fields, including the Ministry of Environment and Green Development visit under Mongolian law. Lender audit inspectors visit from World Bank and EBRD, while Oyu Tolgoi also has its own internal and external audits.
With access to a huge saline aquifer and the technology to utilize it for 40 years via recycling, it would seem that Oyu Tolgoi is well ahead of the curve as the other mines are still sorting out their water resources—including state-owned Tavan Tolgoi. Oyu Tolgoi is off the map of the water resource concerns detailed by World Bank and seems unlikely to significantly impact the non-renewable freshwater aquifers and shallow wells that locals rely on.
Sara Jackson, who travels between Mongolia and the US and has regular contact with the herders, said: “They [Oyu Tolgoi] say ‘yeah we have enough water for X number of years—and we’re looking for more.’ And I think people find that distressing and maybe dishonest on some level. They find it distressing [that] they are building this huge [mine] and they don’t know where the water is coming from. In a press release for example, people will say: ‘well they just don’t even know where their water is coming from’—they think it [the aquifer] can’t be that big—‘and then they are just going to leave and then we are not going to have any water.’ This is what people say.”
Though the Ministry of Environment and Green Development and Oyu Tolgoi seem to be on the same page, environmental NGOs and the herders express contrasting narratives. Trust certainly seems to be a significant issue, stressed by the underlying data on the limited water resources in the Gobi which World Bank notes as “sufficient to cover the water demands in the next 10–12 years” —unless technology changes. In 2005, water use was estimated at 85,000 meters cubed (m3)/day but in 2020 it could rise to 425,000.
Where others see limitations, Newby sees a future: “The Gobi has a lot more potential on water than is currently known and if that potential was really understood then it would take away a lot of the stresses that we are seeing.” Yet he understands the concerns. “A lot of other projects seem to be all about the minerals. There is a feasibility/infrastructure [issue] that does not necessarily lead the way to keep up to speed with mineral studies.”

Short URL: http://ubpost.mongolnews.mn/?p=1590

Posted by on Oct 25 2012. Filed under Онцлох мэдээлэл. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

1 Comment for “Uncovering the Gobi ‘Watergate’”

  1. [...] wrote a brief guest post on this blog about the neglected needs of the herders.   By Skype interview she told me that herders view Oyu Tolgoi’s further water explorations as proof that the company [...]

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